IEM Served As Model

July 30, 2003 | Australian Financial Review

Senate Democrats are in an uproar about a new Pentagon project they're calling too bizarre to be true: an online futures exchange where the "commodities" are possible Middle East events such as the assassination of political leaders. The intent of the project, called the Policy Analysis Market, is to use "market-based techniques for avoiding surprise and predicting future events", according to a Pentagon report to Congress. One question posed in the Pentagon report: "Will terrorists attack Israel with bioweapons in the next year?" Traders would be those willing to bet their own money on when the events will occur. The effort is loosely based on the Iowa Electronic Markets, a futures exchange run by the UNIVERSITY OF IOWA College of Business, that anticipates US election results and Federal Reserve decisions.